SR-407-003-012
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Santa Monica, California, April 17,1981
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Housing Authority
FROM:
City Staff
SUBJECT
Proposed Agreement Between the Housing Authority of the City of
Santa Monica and Raymond Nam to Impose Restrictions on Real Property
~ackground
On September 23, 1980, a Notice of Intent to issue a Coastal Development Permit
was approved for the construction of five condominium units to be located at
245 Ocean Park Boulevard, Santa Monica. Among the conditions incorporated into
the final approval was a requirement that one of the five units be priced at an
"affordable" level. Before the final permit can be issued, the Coastal Commission
has required that the developer, Raymond Nam, enter into an "Agreement Imposing
Restrictions on Real PropertylJ with the Housinq Authority of the City of Santa
Monica. The provisions of tbe pioposed agreement, which govern allowable income
and assets of purchasers as well as sales price of the unit, are described below.
Terms of the Agreement
The Coastal Permit requires the developer to sell one two bedroom unit at a price
not to exceed 2.5 times the median income for a family of four (4) for the Los
Angeles Metropolitan Statistical Area. The current median income for a four (4)
person household is $21,300. Although the final sales price will not be fixed
until receipt of the public report (white slip) from the California DepartMent
of Real Estate, at current median income levels, the maximu~ sales price \V0u1d
be $53,250.
The agreement also provides that total monthly payments including principal,
interest, taxes, and insurance will be equal to no less than twenty-five percent (25%)
and no more than forty percent (40%) of gross monthly income of a person earning
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Housing Authority
April 17, 1981
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ninety-five percent (95%) of the median for a family of four (4). (This amount
is $20,235). If it is assumed that the purchaser's income and assets equal the
maximum allowed today, the resulting sales price would, in fact, approximate
Fifty-three Thousand Dollars Two Hundred Fifty ($53,250). The projected monthly
costs to support this estimate are shown below.
Maximum Monthly Housing Payment =
$20,235 x 40% =
12
$674.50
Estimated Property Taxes =
$53,250 x 1.25% = $55
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Monthly Home Ownership Fee = $100
(Est.)
Debt Service $489.05
(75% loan at 14.5% for
30 years)
Monthly Insurance Payment $30
(Est.)
TOTAL $674.05
Resales are controlled by the permit, both as to all~~able price increases and
eligible purchasers. The resale price change is tied to the percent of change
in the median income level from the time of initial sale to the time of resale.
Eligible income levels would be recalculated by the formula described above.
In order to assure that this unit is sold to eligible families, at initial
sale and any subsequent sale during the 30 year term of the condition, the Coastal
Commission further required the involvement of the City Housing Authority as an
additional condition of the permit approval.
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Housing Authority
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Ap r i1 1 7, 1 98 1
Discussion
The attached agreement which has been approved by the Coastal Commission has been
submitted by the developer for Housing Authority consideration. If the agreement
is approved the Authority would:
1. Prepare an information packet and application form to be made available
to all interested buyers.
2. Utilize reasonable criteria for determining eligible applicants to
purchase so long as such applicants are certified to be eligible under the specified
income and asset criteria. and to inform eligible applicants of the opportunity
to purchase.
3. Provide eligible applicants for the affordable unit to Developer.
4. Provide information to applicants with regard to available financing
and references to available financial institutions.
5. Provide counseling with regard to rights and responsibilities of
home ownership and the deed restrictions contained in the Attachment to Grant
Deed (Exhibit IIC") and the procedures for resale.
6. To enforce the provisions of the Attachment to Grant Deed with regard
to any subsequent sales and to cause such Attachment to be made part of any sub-
sequent grant deeds.
The Housing Authority would be reimbursed for administrative costs up to a ceiling
of 1.5% of the sales price.
The City's Housing Commission will review the proposed Agreement at their meeting
on April 28, 1981. The Com~ission's recommendations will be fon~arded to the
Housing Authority for consideration.
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Housing Authority
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Ap r i 1 17, 1981
The City Attorney's office has reviewed and approved this agreement as to form
and content.
Recommendation
It is recommended that the Housing Authority;
1. Modify the attached agreement such that the developer is required
to prepare the application information packet which would then be reviewed and
approved by the Housing Authority prior to circulation to interested parties, and
2. Approve the attached agreement with recommended modifications and
authorize the Chairman to execute the document.
Prepared by: John Herner
Mindy Leiterman
JH:ML'sh
Attachment